Financial Power of Attorney

August 12, 2013

A financial power of attorney, or “power of attorney”, is a legal document that appoints another individual, called your “attorney-in-fact”, to manage assets and other financial affairs. The power granted by the document takes effect immediately upon the date it is signed, and allows your attorney-in-fact to access, manage, liquidate, or transfer your assets on your behalf in the event that you are unavailable or unable to do so.  The power granted to your attorney-in-fact is terminated immediately and automatically upon your death.

You can determine how much power is granted to your agent in your power of attorney by executing either a general or a limited power of attorney.  A general power of attorney authorizes your agent to manage your financial affairs in as broad a manner as possible.  A limited power of attorney specifies the actions or decisions your agent is authorized to make on your behalf or identifies any specific limitations you wish to make on the power granted.  You may also limit the length of time your attorney-in-fact is authorized to act.

In Minnesota, there are two types of financial powers of attorney: a durable power of attorney and a statutory short form power of attorney. The durable power of attorney is a document that explicitly identifies each power granted by the document.  It is a more traditional version of the document, and may better meet your needs if you plan to move to another state or spend a significant amount of time outside of Minnesota.  The statutory short form power of attorney incorporates the powers codified in Minnesota law and can be more effective within the State of Minnesota. A Minnesota attorney can provide further direction as to which document best addresses your situation.

As stated, both the durable and statutory short form powers of attorney remain valid even if you become incapacitated and unable to manage your financial affairs; both are terminated immediately upon your death. In the event that you become incompetent or incapacitated prior to executing a power of attorney, it may become necessary for the Court to appoint a Conservator to govern your financial affairs on your behalf. A conservatorship is a lengthy and costly process that requires ongoing Court supervision that may be avoided through the use of a valid financial power of attorney.

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